A PERFECT STORM OF FACTORS POINTS TOWARDS A HARSH OUTLOOK
Britain’s manufacturers are firmly in a nosedive as the perfect storm of Brexit uncertainty, slowdown in major markets and trade wars takes its toll according to a survey published today by Make UK, The Manufacturers’ Organisation and business advisory firm BDO LLP. The Q3 Manufacturing Outlook survey comes on
the back of the latest PMI data and shows all indicators have weakened significantly, with investment and domestic orders in particular turning negative.
The survey also shows that a weaker currency is
providing no solace, with export orders down despite prices falling. This indicates foreign customers are not buying British goods even though they are 6% cheaper than this time last year. Seamus Nevin, chief economist at Make UK, said:
“Industry is facing a perfect storm of factors, compounded by a hard Brexit which could not be coming at a worse possible time. In normal circumstances a global slowdown on its own would be enough, but add trade wars and the biggest shock to our economy since the War and there
seems little doubt that, barring a remarkable turnaround, the sector may be heading for recession.” Tom Lawton, head of manufacturing at BDO,
said: “Global competition, skills shortages, lack of a coherent industrial strategy from government and continuing technological disruption has made UK manufacturing a challenging sector for decades. The long shadow cast by the possibilities of a no deal Brexit and the uncertainty of recent months has only added to the difficulties for the sector.” According to the survey, the total order balance,
whilst still just in positive territory, fell to +2% in Q3 (down from +8% in Q2 and +16% in Q1) indicating the significant rate of weakening which has taken place since the start of the year. At current trend, according to Make UK, this will almost certainly turn negative in the final quarter of the year, barring a remarkable turnaround in the economy. Output also fell significantly, down to +4% from
+17% in Q2, indicating there is little, if any, evidence that stockpiling is building. This is leaving
companies far less prepared for ‘no deal’ than they were earlier this year. After two quarters where they were below
domestic orders, export orders (+6%) have returned to a level above domestic orders which have turned negative at -6%. Such significant weakening cannot be explained by the poorer global outlook alone, especially as UK and export prices are down by 8% and 6% respectively since this time last year. With this harsh outlook it is not surprising that
both investment and recruitment intentions have also weakened significantly. Recruitment has continued the decline witnessed for the last four quarters. Furthermore, investment intentions, which have been paralysed for the last year, have now entered negative territory for the first time since Q3 2016. As a result of this weakening picture, Make UK is
now forecasting manufacturing growth of just 0.1% in 2019 (down from 0.2%) and 0.6% in 2020 (down from 0.8%). (All these forecasts are based on avoiding ‘no deal’).
www.makeuk.org
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THE MISCONCEPTIONS AROUND CHP FINANCING
One of the more innovative ways of tackling the single-use plastic problem is through the development of edible packaging, which has just taken a step closer to being rolled out on the high street thanks to Government funding. The Lucozade Ribena Suntory- backed edible, plastic-free packaging capsules are called Oohos, and are made entirely from seaweed extract, a material called Notpla. They offer a way to deliver drinks under 100ml in a plastic-free form. They are completely edible and also naturally biodegrade in four to six weeks – as quickly as a piece of fruit. The funding, secured by Ooho
manufacturer Notpla, in partnership with Lucozade Ribena Suntory and Vita Mojo, was awarded by Innovate UK, part of UK Research and Innovation – the UK Government’s innovation agency. Gimmick, or a real step forward in the search for sustainable packaging? We’ll have to wait and see. Michelle Lea
Editor
Earlier this year, Aggreko conducted research into the decentralised energy market and found that 55% of respondents believed solar had the most potential for their business whereas only 14% said combined heat and power (CHP).
Aggreko states that this further
highlights the market misconception around CHP not being as easy to finance – also initially highlighted by the Department of Energy and Climate Change (DECC) in 2014 in its ‘Factors Affecting The Uptake Of Gas CHP’ report, which states the availability of capital for investment in gas CHP is a common problem. Fast forward five years, and Aggreko is said to be the only player in the UK to offer a full CHP rental solution, and is now urging industry to consider the technology as a viable decentralised option with reasonable implementation costs. With the BEIS making additional changes to the Industrial Heat Recovery Support programme, and the Scottish Government also confirming it will be bringing forward
a Heat Networks Bill in the 2019 Programme for Government, Aggreko is hopeful this will help to shift behaviours around CHP in the UK. Each CHP application is different
and Aggreko works with its customers to meet a defined set of objectives in order to provide solutions that are up to 85% efficient. Its latest innovation is a standard low temperature hot water (LTHW) CHP solution. Matt Parker, Head of Temperature
Control at Aggreko said: “It’s safe to say our expert team are well placed to help UK industry reduce energy costs and carbon emissions via CHP. We hope our latest product launch and campaign will help to alleviate any pre-existing concerns regarding finance.”
www.aggreko.com/en-solution/chp
The water sector should be at the forefront of the UK’s artificial intelligence and data revolution, according to Ofwat. In its Driving Transformational Innovation report, the regulator set out high expectations for data and analytics. This, along with tough regulatory targets and the challenges arising from climate change and population growth, means effective use of data analytics has never been more critical for water. ‘Data: Now & Beyond’, a British
Water event taking place in Leeds in October, will provide an opportunity to discuss best practice and look ahead at ways to tackle tomorrow’s challenges. Speakers from water companies, the supply chain and other sectors – including from Ofgem and Network Rail – will share information on the best way to handle data and analytics. The event will also include: high level discussions between water companies, regulators and the supply chain; talks on innovation and new technology; and workshops to encourage problem-solving.
www.britishwater.co.uk
4 SEPTEMBER 2019 | PROCESS & CONTROL
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